Exclusive: Reliance Industries pumps Rs 500 Cr in Embibe

While the majority of businesses have been hit hard because of the COVID-19 pandemic, online education has been witnessing unprecedented surge in demand as schools, universities and offline classes are closed. Identifying this as a perfect time to double down its bet on the segment, Reliance Industries Limited has poured in an additional Rs 500 crore in edtech platform Embibe. 

This is the largest fund infusion by the Mukesh Ambani-led group ever since it acquired Embibe in April 2018. 

According to regulatory filings, Embibe has approved allotment of 50 lakh compulsorily convertible preference shares (CCPS) at Rs 1000 each to raise Rs 500 crore from RIL. Importantly, these shares will carry a dividend rate of 12% per annum compounded quarterly.

RIL has already released Rs 30 crore  while the remaining proceeds are expected to come soon. This investment also carries several conditions, including conversion of these preference shares along with outstanding dividend  into equity shares if the founder ceases to be the CXO and executive director.

The mega infusion by Reliance Industries has just a few weeks after invested Rs 90 crore in Embibe in February. 

RIL had acquired a 73% stake in Embibe for about Rs 100 crore. Embibe had also acquired an online test preparation startup MockBank last year while the firm recently acquihired test prep platform OnlineTyari. Entrackr had exclusively reported this development last month.

Decision to infuse funds into Embibe by RIL has come at a time when edtech companies have been growing well in the past 12-15 months. While the valuation of Byju’s crossed $8 billion this year, Unacademy recently garnered a three digit round at a post-money valuation of over $500 million. 

Other notable firms in the segment including Vedantu and Doubtnut have also raked in significant investments. The euphoria in the segment has heightened since the beginning of 2019 and a section of experts anticipate that edtech companies will be more stable in revenue and growth than other e-commerce segments.

They corroborate this by citing financial performance of edtech major Byju’s in FY19. Its operating revenue increased almost threefold to Rs 1,306 crore in the last fiscal from Rs 471.2 crore in FY18. BYJU’s also managed to control losses by 76.3% to Rs 8.8 crore during FY19 as compared to Rs 37 crore in FY18.